Moody’s Downgrades note EDF – The Tribune.fr

The EDF setbacks have not escaped the credit rating agencies. Thursday, Moody’s downgraded by one notch to “A2″ Note EDF, combining it with a negative outlook. This is the 6th best possible rating.

This decision “reflects Moody’s opinion that the action plan of the group announced on April 22 will not be enough to deal with pressures resulting from low energy price environment combined with a major investment program “ the agency said in a statement, Friday, May 13

Moody’s points out that even though electricity prices have rebounded recently, they have declined in France over the past year from 21% to about 30 euros per megawatt / hour currently. “A prolonged period of low electricity prices affect EDF due to its exposure to energy generation activities that currently meet about 50% of its EBITDA” , says Moody’s.

the production costs of EDF are also particularly rigid because the nuclear and hydropower account for about 85% of total production of 619 terawatt hours in 2015, says one source as well.

the project Hinkley Point in the sights of Moody’s

Among the factors that argue for a possible new downgrade, Moody’s cites the risks associated with the implementation of the recovery plan, and sale of certain assets. The agency is also concerned that this plan is insufficient to deal with a permanently low prices and also quotes “additional project risks Hinkley Point in the UK if it were to materialize”.

As a reminder, EDF announced late April a series of measures to strengthen its financial position, including a capital increase project of about 4 billion euros and cost reductions.

An increase in the unlikely medium term note

the CEO of EDF, Jean-Bernard Levy, has stepped into the breach on Thursday to defend the project vigorously disputed by EDF unions requesting the deferral two or three years, for fear that the cost of £ 18 billion (approximately EUR 23 billion) would jeopardize the viability of the group.

Mr. Levy said he is a “mature” project and “profitable” due to price and volume guarantees obtained from the British government for a period of 35 years from the commissioning of the first reactor, officially scheduled for 2025 to 2060.

Moody’s also noted that the reasons to raise the note “is unlikely in the medium term” but the outlook could return to ” stable “ if EDF management renounced the Hinkley Point project.

(with AFP)